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2006 (9) TMI 149 - HC - Income TaxPowers u/s 260 - Profits based upon turnover from clients and brokers - discrepancy or error - books of account - percentage of brokerage on the basis of the prevailing practice in the recognised stock exchange - HELD THAT:- The observation of the learned Tribunal about the percentage of profit appears to be contrary to appendix A to regulation 14 as well as the established practice of the Gauhati Stock Exchange Limited that no brokerage is involved for transactions between one broker with another at the floor of the stock exchange. Therefore, outright rejection of the assessee's case appears to be contrary to the established principles of law. The Assessing Officer was apparently in error in computing profits in respect of the transactions with other brokers at 1/2 per cent. since the provisions of regulation 14 and the established practice of the Gauhati Stock Exchange have not been taken into consideration. Similarly, the computation of profit at the rate of 1 per cent. in respect transactions with clients on notional basis is also not sustainable in law. The ratio available from the judgment of Santosh Hazari v. Purushottam Tiwari [2001 (2) TMI 131 - SUPREME COURT] would show that in a case where the findings of fact, by the Tribunal are perverse and contrary to materials on record and based on surmises and conjectures, the High Court u/s 260A would be competent to interfere. The other feature that emerges is that the income has to be deduced from the books of account and other documents furnished and there is no scope for any conjectures and surmises. If the method of accounting is not faulty and there is no suppression of material facts, the authority cannot embark upon a speculative assessment of notional profit. In the instant case, from the discussion made, it would appear that the Assessing Officer did not find any fault with the books of account and the method of accounting employed by the assessee, and that there has been suppression of any material fact which deterred him from computing the actual net profit. The Assessing Officer has not pointed out any defect in the detailed turnover submitted during the assessment, and from this point of view, the appeal at hand cannot be dismissed for want of substantial question of law. Therefore, the judgment and order of the Tribunal in upholding the addition to the profits of the assessee is not sustainable on the facts. In the result, the appeal is allowed, the judgment and order of the learned Tribunal is set aside and that of the CIT(A) are restored. The questions of law formulated in this appeal are answered accordingly in favour of the assessee and against the Revenue.
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